Telefónica reduces the value of its investment in Virgin Media O2 by 3 billion after its restructuring | Companies

Telefónica has adjusted the value of its stake in British Virgin Media subsidiary O2 by a total of €3.005 million. In its annual financial report, auditor PWC said the operator estimated Virgin Media O2’s investment accounted for in share capital at €7.774 million at the end of 2023, down from €10.779 million in the previous year.

The operator remembers this…

Telefónica has adjusted the value of its stake in British Virgin Media subsidiary O2 by a total of €3.005 million. In its annual financial report, auditor PWC said the operator estimated Virgin Media O2’s investment accounted for in share capital at €7.774 million at the end of 2023, down from €10.779 million in the previous year.

The operator recalls that during 2023, Virgin Media O2 recorded an impairment of goodwill in the amount of 3.107 million pounds (about 3.572 million euros). 50% of this amount, approximately €1.786 million, is part of the negative result integrated under the UK operator’s equity method for the 2023 financial year in accordance with Telefónica’s participation.

This impact, as well as the allocation of €1,300 million for the employment regulation (ERE) file implemented in the main subsidiaries in Spain, led Telefónica to close 2023 with a loss of €893 million, the first time in a full year since 2002.

Brazil

Additionally, Telefónica increased contingency liabilities in tax and regulatory litigation in Brazil by €1.447 million during the past year.

In the above-mentioned report, the telecom indicates that at the end of last year it had contingent liabilities related to corporate tax, other taxes and regulatory procedures in Brazil amounting to €5.678 million, €6.909 million and €1.264 million, respectively. A year earlier, as of December 31, 2022, the amount of contingent liabilities associated with tax procedures for income tax, other taxes and regulatory procedures amounted to 5,346 million; 6,009 million and 1,049 million respectively.

The auditor notes that the group breaks down Telefónica Brasil’s contingencies in which there is no probable risk of loss, but there remains a possible risk that said loss will ultimately occur or, if the loss is probable, it cannot be estimated reliably; and in the event of an income tax contingency where it is considered likely that the tax authority will adopt an uncertain tax regime.

Likewise, as of December 31, 2023, Telefónica Brasil maintained provisions for unforeseen tax expenses of EUR 515 million and provisions for contingencies of EUR 329 million. In 2022 there were 446 and 336 million, respectively.

In this case, the auditor notes that the group recognizes provisions related to legal proceedings in respect of which management believes that a loss is probable and the amount of the loss can be reliably estimated, and where it is considered unlikely that the tax authority will accept its tax regime in accordance with in the event of contingent income tax liabilities arising.

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